Uncovered Options Trading System
Contract: Contract is a term of reference describing a unit of trading for a commodity future or option. At the same time contract is an agreement to buy or sell a specified commodity, detailing the amount and grade of the product and the date on which the contract will mature and become deliverable.
Contract Month: Contract Month (also referred to as Delivery Month) is the month in which delivery is to be made in accordance with the terms of the futures contract.
Deferred Delivery Month: Deferred Delivery Month is the distant delivery months in which futures trading is taking place, as distinguished from the nearby futures delivery month.
Futures: Futures (also called Futures Contract) is a legally binding agreement to buy or sell a commodity or financial instrument at a later date. Futures contracts are normally standardized according to the quality, quantity, delivery time and location for each commodity, with price as the only variable.
Long: Long Futures trader is a trader who has bought futures contracts or options on futures contracts or owns a cash commodity. Long position (long trading) is opposite to Short position (Short trading).
Short: Short (shorting) is the selling side of an open futures contract.
Straddle: Straddle ( also referred to as Spread) is an option position consisting of the purchase of put and call options having the same expiration date and strike price.
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Naked options trading is very risky - many people lose money trading them. It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options.